Best Term Insurance Plans in 2020-21 – Top Term Plans in India

One of the first step in financial planning is to take life insurance plan in the name of earning member in the family. However, we see a lot of mis-selling happens in the name of ULIPs, investment products, etc., saying they are one of the best life insurance plan in India. If you want to protect your family’s future, even in your absence, consider a term insurance plan that comes with low cost. How to pick-up best term insurance policy in India? Which are the Best Term Insurance Plans you can consider in 2020-21? What are the Top Term Plans in 2020-21 that have the highest claim settlement ratio (CSR)?

What is Term Plan and what are its benefits?

If you are aware about the Term plan concept, skip this section.

Term plan provides risk coverage to the insured individual. In case of unfortunate death of the life insured, the nominee would get sum assured. Since this is the simple risk coverage plan, there is no maturity amount this plan.

Here are the benefits of term insurance plans:

How we have chosen a Best Term Insurance Policy in 2020-21

Let me list you few features which we considered in picking-up a best term insurance policy.

1) High Claim Settlement Ratio (CSR)

The claim settlement ratio is one of the criteria which we have considered in picking up a term insurance plan. While this is not the only criteria, this is one of the important criteria to consider a term plan.

CSR in simple terms refers to how many claims, an insurance company has processed out of total claims received. As an example, if the insurance company received 100 claims, but accepted only 95 and rejected 5, the CSR is 95% (95/100 x 100). Higher the claim settlement ratio is better since there would be less chances that your family claim in the future would get rejected.

2) How good is the insurance company: This is difficult parameter. How can you judge whether the insurance company is good or not? We feel longer the existence of it, it is better known with positives and negatives of the company. Hence, we have filtered companies that have a good operating history of more than 5 years.

3) Unique or Useful features o term insurance plan: Can you buy a term plan with low cost but offers useless features? No one would really want to opt for that. I have filtered Term insurance plan which has basic features + unique features that would be helpful for individuals who are planning to take insurance plans.

4) Term Plans with Low Premium: While life insurance premium is not the only criteria in selecting the insurance plan, we have given preference to term plans that has unique features with low premiums.

Best Term Insurance Plans in 2020-21 | Top Term Plans in India

Here are the list of the good term plans in India.

1) HDFC Click 2 Protect Plus Term Insurance Plan

2) Max Life Term Insurance Plan Plus

3) ICICI iProtect Smart Term Insurance Plan

4) LIC Term Insurance Plan

5) Aegon Life iTerm Insurance Plan

Note:Tata AIA Insurance claim settlement ratio is 99% and consistently high in the last few years. However, Tata AIA has removed the online plan from their website. Means one cannot purchase online. I have personally contacted them and was inquiring multiple times. Considering no response and its non availability online, we have not covered Tata Term insurance plan in this list. However we would cover its offline term plan in next week for the benefit of readers

Best Term Insurance Plans in 2020-21 | Top Term Plans in India

Now let us go into the details of these insurance plans.

#1 – HDFC Click 2 Protect 3D Plus Term Insurance Plan

Here are the key features of HDFC Click 2 Protect Plus Term plan.

Minimum Entry age is 18 Years and Maximum entry age is 65 years

Maximum maturity age is 85 Years.

Policy tenure is between 5 years and 40 years.

The minimum basic sum assured is Rs 10,000.

Maximum Sum Assured – No limit.

There are 9 different options like Life Option, 3D Life Option, Extra Life Option, Income Option, Extra Life Income Option, Income replacement option, Life Long Protection Option, 3D Life long protection, Return of Premium Option in this plan.

The claim settlement ratio for FY 2018-19 (latest one that is announced in Dec-2019) is 99.04%.

Basic Premium is approx. Rs 9,717 (Incl taxes) per annum for a 30 year non smoker for a 30 year policy for Rs 1 Crore sum assured (Life option).

All future insurance premiums are waived on Accidental Total Permanent Disability (available under all options) and on diagnosis of a Critical Illness (available under 3D Life & 3D Life Long Protection options).

Life Stage Protection feature offers to increase the insurance cover on certain key milestones without medicals. Flexibility to increase your cover every year through top-up option.

Below are the major features of this term insurance plan from Max Life.

Minimum Entry age is 18 Years and Maximum entry age is 60 years

Maximum maturity age is 85 Years.

Policy tenure is between 10 years and 50 years.

Minimum Sum Assured is Rs 25 Lakhs.

Maximum Sum Assured – Rs 100 Crores.

The premium payment mode can be monthly, quarterly, half yearly and annually.

Limited Premium payment option available where you can pay the premium for a limited period, however, enjoys term insurance plan for the entire tenure of the plan. You can save up to 30% of premiums of you opt for this.

Option to add benefits like accidental death and dismemberment, premium waiver, and critical illness covers (On payment of additional premium.

Special premium rates for female individuals.

The claim settlement ratio for FY 2018-19 (latest one that is announced in Dec-2019) is 98.74%, which is highest among all insurance companies.

Basic Premium is approx. Rs 13,216 per annum (Incl taxes) for a 30 year non smoker for a 30 year policy for 1 Crore sum assured for basic life cover. If you opt for the other two options, the premium would be higher.

Max Life Term Insurance plan is one of the best term insurance plans for 2018 which has high claim settlement ratio and comes with low premium.

#3 – ICICI iProtect Smart Term Plan

Here are the key features of ICICI iProtect Smart Term Plan.

Minimum Entry age is 18 Years and Maximum entry age is 65 years

Maximum maturity age is 99 Years.

Policy tenure is between 5 years and 81 years (you an buy at age of 18 and extend up to 99 years for almost 81 years of tenure)

Minimum Sum Assured – Based on minimum premium of Rs 2,400 per annum.

Maximum Sum Assured – No limit.

There is an optional rider that it pays if diagnosed by any of the 34 Critical Illnesses.

Life cover for terminal illness.

Optional accidental death benefit rider available.

It comes with 4 levels of protection 1) Life 2) Life Plus 3) Life and Health and 4) All in one.

The claim settlement ratio for FY 2018-19 (latest one that is announced in Dec-2019) is 98.58%

The premium is approx. Rs 8,279 per annum for a 30 year non smoker for a 30 year policy for Rs 1 Crore sum assured. The accident death cover would cost additionally.

I feel ICICI iProtect Term plan is one of the best online term insurance plans as it comes with several benefits and riders which are useful.

#4 – LIC Tech Term Insurance Plan No. 854

LIC is trusted brand in the insurance segment in India that has been catering to insurance for several decades. LIC has launched two term plans in Sep-2019. Among this, LIC Tech Term Insurance Plan is a comprehensive plan. This is online plan and no intermediaries will be involved.

Here are the key features of the LIC Tech Term Insurance Plan.

Minimum Entry age is 18 Years and Maximum entry age is 65 years

Maximum maturity age is 80 Years.

Policy tenure is between 10 years and 40 years.

Minimum Sum Assured is Rs 50 Lakhs.

Maximum Sum Assured – No limit.

Optional accidental death benefit rider available in this plan.

Differential premium rates for Smoker/Non-Smoker lives.

Proposal on own life ONLY will be considered.

The claim settlement ratio for FY 2018-19 (latest one that is announced in Dec-2019) is 97.79%.

Flexible premium payment options (single and regular premiums).

The premium is approx. Rs 7,216 per annum (Excl Taxes) for a 30 year non smoker for a 20 year policy for Rs 1 Crore sum assured post online rebate. Note the premium is for a 20 year policy while other plans are compared with 30 years tenure, so premium looks lower now.

LIC Tech Term Insurance Plan is one of the Best and Top Online term insurance plans in 2020-21 as it has brand value as well as trusted by Lakhs of people in India. You can read 360 degree view of LIC Term plan here.

#4 – Aegon Life iTerm Insurance Plan

Here are the key features of the Aegon Life Online Term insurance plan.

Minimum Entry age is 18 Years and Maximum entry age is 65 years.

Maximum maturity age is 75 Years.

Policy tenure is between 10 years and 40 years.

Minimum Sum Assured is Rs 10 Lakhs.

Maximum Sum Assured – No limit.

Inbuilt accidental death benefit rider.

Two death benefit options 1) Immediate lump sum 2) 50% lump sum and 3% of the sum assured per month for next 5 years.

Differential premium rates for Smoker/Non-Smoker lives.

The claim settlement ratio for FY 2018-19 (latest one that is announced in Dec-2019) is 96.45%.

The premium is approx. Rs 7,087 per annum (Excl Taxes) for a 30 year non smoker for a 30 year policy for Rs 1 Crore sum assured.

1) Can my insurance company reject my family claim, citing some reason in the future?

As per guidelines from IRDA, after 3 years from the date of policy, a claim cannot be rejected citing any reason. However, your insurance company can always reject claim within 3 years from the date of policy for 100 reasons.

2) Why do we need a term insurance plan?

The entire family, including children, would depend on the earning members in the family. What happens if the head of the family or the earning member dies in an accident and not in this world anymore? While the loss of the family member cannot be replaced with anything, kids’ education expenses + daughter’s marriage expenses would be huge for the spouse to manage. Since term insurance plans come with low cost and provides high coverage of insurance, this is one of the best ways to secure your life.

3) Where can I check term insurance plans comparison?

There are several portals like coverfox.com, policybazaar.com, policyx.com that provides a comparison of term insurance plans. However, I felt sometimes these websites are biased. You can do the comparison of such plans on such aggregator portals, but you go and buy term insurance plans directly from insurance companies.

4) Which company Term Plan is best?

You need to select a term plan based on the features, premium and claim settlement ratio. We have provided top term insurance plans in this article. You need to review them and consider a good term plan that suits your need.

5) Which is the best term insurance plan in LIC?

LIC has launched two term plans recently, i.e. Jeevan Amar and Tech Term Plan. Among this, LIC Tech Term is an online term insurance plan that has unique features and comes with low premium. Hence Tech Term is the best term insurance plan in LIC.

6) Can I take 2 Term Insurance Plans?

There are cases where the insurance company may not honor the claims for various reasons. To avoid such situation to our family in the future, one can take 2 term insurance plans to be on the safer side.

7) Which is the cheapest term insurance plan in India?

The majority of the private insurance plans indicated above are cheapest term insurance plans in India. However, among them, Aegon Life iTerm insurance plan is the cheapest term insurance plan.

8) What is limited pay in term insurance?

Generally, we pay term insurance for the entire tenure. However, under limited pay, you would pay only for a specific period (say 5/10/15 years) and have risk coverage for the entire period of tenure (say 10/15/20 years).

9) Does the term insurance premium increase year on year?

No. The term insurance premium which is fixed at the time of taking the term insurance would not change for the entire duration of the policy.

Readers, have you considered any of these best term insurance policies? What are your experiences with your insurance company?

10) Can we opt for a term plan with return of premium?

Term plan with return of premium works similar to term plan, however has a maturity benefit. Since it pays a maturity benefit, the premiums under these plans are high compared to regular term plans.

11) Should we opt for an online term insurance plan or offline term insurance plan?

Insurance companies offer both offline and online term insurance plans. However online term insurance comes with lower premium compared to offline ones. Hence, one can opt for online term plans.

12) Is it good to take 1 crore term insurance or 2 crore term insurance?

This would depend on your income, expenses and age. If you are at the beginning of the career or have low income, you may not need 1 crore term insurance. However, when you are in mid-age or when your income is good, you can review 1 Crore term insurance or 2 crore term insurance plans. Again it is based on your need.

13) Should you opt for single premium term plans?

Some term plans come with single premiums too. Such plans are good on face of the plan, however you need to pay single premium. Instead, you can pay yearly premium and invest such single lump sum amounts in a good mutual fund scheme which can fetch some returns for you.

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I have done my Post Graduation in Finance. I have over 20 years of experience in analyzing various investment options and money saving ideas. I love doing financial planning, Mutual Fund Analysis, Searching long term Stocks for wealth creation, IPO Reviews, Analyzing Life Insurance and Health insurance Plans etc.

17 Comments

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FEROZ AHMED

B P PANT

Good analysis . I think LIC tech term is worth to consider because of LIC brand value and reliability for claim settlement .I know many people whom LIC has contacted for money back or maturity claim settlement which they have been forgeted.

Hitender

Hitender

Hi, Mr.Suresh
I was keenly waiting for the same post from 2-month’s finally you have posted, I”m NRI which term plan will be better for me & wich company, pls suggest me the same.
Awaiting your prompt response….Thanks